Econ 103 Final

If a country had a trade deficit of $10 billion and then its exports rose by $20 billion and its imports rose by $10 billion, its net exports would now be

0

The nominal exchange rate is 2 Barbados dollars per U.S. dollar. If the price of a good in Barbados is 3 Barbados dollars and the price in the U.S. is 2 U.S. dollars, what is the real exchange rate to the nearest 100th?

1.33 Barbados good per U.S. good

In the long run, if the Fed increases the growth rate of the money supply...

inflation will be higher

for an economy such as the United States, what component of the demand for goods and services is most responsible for a decrease in output?

investment

If inflation expectations rise, the short-run Phillips curve shifts

right, so that any inflation rate unemployment is higher in the short run than before

Which of the following can tax cuts influence?

aggregate demand, aggregate supply, and/or investment spending

Citizens in India buy music from the U.S. To do so they use Indian rupees to purchase U.S. dollars. If U.S. citizens hold these rupees rather than spending them, what happens to U.S. net exports and U.S. net capital outflows?

both U.S. net exports and U.S. net capital outflow rise

Which of the following would both raise the U.S. exchange rate?

capital flight from other countries to the U.S. occurs and the U.S. moves from budget surplus to budget deficit

When the Fed sells government bonds, the reserves of the banking system...

decrease, so money supply increases

The effect of budget deficits on interest rates

decreases private investment, so eventually capital stock falls

A favorable supply shock causes the price level to...

fall. To counter this a bank would increase the money supply

The value of money rises as the price level...

falls, because the number of dollars needed to buy a representative basket of goods falls.

The long-run aggregate supply curve shifts right if

immigration from abroad increases, the capital stock increases, and technology advances

Sectoral shifts in demand for output

increase unemployment due to job search

What would shift long-run aggregate supply to the right?

increased immigration from abroad, a decrease in the price of an imported natural resource, and/or opening the economy to international trade

Which of the following leads to a lower level of unemployment in the long run?

neither an increase in the size of the money supply nor an increase in the money supply growth rate

Most economists use the aggregate demand and aggregate supply model primarily to analyze

short-run fluctuations in the economy

Which of the following would cause the real exchange rate of the U.S. dollar to depreciate?

the U.S. government budget deficit decreases